Very Bad Credit Car Loans
In today’s society up to one fourth of all Americans do not qualify for a standard car loan due to their unfavorable credit scores. If you fall into this category, you are not alone. Plus, because so many people fall into this category, there are many options available for you. It is important to note that the alternative loans are not like the standard car loans people apply for. The structure of auto loans for people with bad credit is designed to protect the people who are providing the loan.
With this in mind, you cannot get one-hundred percent full financing if you have bad credit. Most lenders who offer very bad credit car loans will require you to make a down payment that is at least 20% of what the car is valued at. This gives the person/company that is lending the money some protection if you should fail to repay the loan.
You also have to realize that the interest rate attached to your loan will not be the same as a person with good credit. Today, if you have a great credit score, your car loans will have an interest rate of approximately seven to nine percent. Those who have to get a bad credit loan should anticipate the interest rate to be much higher. Most of these loans carry an interest rate of between ten and fifteen percent, usually closer to fifteen. The actual rate will depend on your credit score and the amount you are able to pay as a down payment.
You should also realize that the repayment terms of your loan will be shorter than that of a standard car loan. While people with prime credit can take a car loan out for up to 5-7 years, a person with bad credit usually has to repay the loan in 3 years. With this in mind, you have to anticipate higher car payments, but will be able to fully own the car in a shorter period of time. People with prime credit also have the option of taking a three year loan, but are not required to.
You need to watch out for any underhanded methods a bad credit car dealer may try to use in order to get more of your money. One of the most common techniques they tend to use is increasing the price they charge for the car. In order to prevent falling for this tactic take the time to research the typical price of the vehicle you are planning on purchasing. By using online resources, like Kelley Blue Book, you can quickly find the approximate value of a car without spending any money. Performing a quick search for yourself can save you from paying too much for the vehicle from a dishonest dealer.
You also want to use caution when dealing with the financing area of purchasing a car. There is no reason to pay high interest on bad credit used car loans, regardless of how bad your credit is. There are some dealers who manage to get thousands of extra dollars out of unsuspecting bad credit car buyers by raising the price of the vehicle or inflating the interest rate on the car loans. Even a person with bad credit has many options, even if it feels like there are none. If you search online, you will be able to find numerous car lenders who specialize in very bad credit car loans.
